ERI Discussion Paper Series No.80
Income Distribution and Poverty in Japan

October 1997
Fumihira Nishizaki
(Economic Research Institute, Economic Planning Agency)
Yutaka Yamada
(Economic Research Institute, Economic Planning Agency)
Eisuke Ando
(Economic Research Institute, Economic Planning Agency)


This paper presents some preliminary results of measuring income distribution in Japan, based on the micro data sets of the National Survey of Family Income and Expenditure. The focus is mainly on the changes from 1984 to 1994. The analytical framework of this paper closely follows that of the OECD literature using the micro data base known as the Luxembourg Income Study.

Inequality in equivalent disposable income increased and the incidence of relative poverty also rose from 1984 to 1994. Earnings were the largest contributor to the increased overall inequality in disposable income. The increased share of earnings in disposable income played an important role, in addition to the effects of the high level of their share. Work-attachment and the development of earnings were undoubtedly important factors determining relative income and poverty.

Taxes and transfer systems effectively redistributed income. The weakness of transfers in redistribution of income is conspicuous in Japan. Transfers were not well argeted? to the poor; they rather contributed positively to the overall inequality. Taxes, including social security contributions, are quite redistributive. Although the positive contribution of transfers to the overall inequality somewhat increased, taxes became more redistributive, resulting in a partial offsetting of the widening of market incomes.

The elderly benefited the most from the tax-transfer system across demographic groups. This tendency was strengthened over the recent decade as the public pension system matured. Households with a young head experienced a significant decline in relative income, reflecting the poor development of their earnings. However, this was probably due to an increase in the labor participation rate for young females.

Structure of the whole text

  1. Abstract別ウィンドウで開きます。(PDF-Format 154 KB)
  2. page1
    1. Introduction
  3. page2
    2. Distribution across all population
  4. page3
    3. Factors affecting income distribution: an aggregate analysis
  5. page5
    4. Changes in well-being for sub-group of the population
  6. page7
    5. Poverty and low income
  7. page10
    Appendix: The National Survey of Family Income and Expenditure
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